##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number 000-50698
 GREENFIELD ONLINE, INC.
  Delaware
(State or other jurisdiction of 
incorporation or organization)
    
    06-1440369
(I.R.S. Employer Identification No.)
 21 River Road, Wilton, CT 06897
 : (203) 834-8585
  
 þ o
  Large accelerated filer
o
    
    Accelerated filer
þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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##### 



GREENFIELD ONLINE, INC.
 FORM 10-Q
TABLE OF CONTENTS
 PagePart I.
    
    Financial InformationItem 1.
    
    Financial StatementsConsolidated Balance Sheets at March 31, 2008 (unaudited)
and December 31, 2007
    
    
    1Unaudited Consolidated Statements of Operations for the
three months ended March 31, 2008 and 2007
    
    
    2Unaudited Consolidated Statement of Changes in
Stockholders Equity for the three months ended March 31,
2008
    
    
    3Unaudited Consolidated Statements of Cash Flows for the
three months ended March 31, 2008 and 2007
    
    
    4Notes to Unaudited Consolidated Financial Statements
    
    
    5Item 2.
    
    Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    17Item 3.
    
    Quantitative and Qualitative Disclosures About
Market Risk
    
    
    25Item 4.
    
    Controls and Procedures
    
    
    25Part II.
    
    Other InformationItem 1.
    
    Legal Proceedings
    
    
    26Item 1A.
    
    Risk Factors
    
    
    27Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    28Item 3.
    
    Defaults Upon Senior Securities
    
    
    28Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    28Item 5.
    
    Other Information
    
    
    28Item 6.
    
    Exhibits
    
    
    29Signatures
    
    
    
    
    30Exhibit Index
    
    
    
    
    31EX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATIONEX-32.2: CERTIFICATION
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GREENFIELD ONLINE, INC.
 
 CONSOLIDATED BALANCE SHEETS
 (In thousands, except share data
  March 31,
    
    
    December 31,2008
    
    
    2007ASSETSCurrent assets:Cash and cash equivalents
    
    $
    31,530
    
    
    $
    57,949Investments in marketable securities
    
    
    33,435
    
    
    
    Accounts receivable trade, net (net of
allowances of $2,250 and $2,309 at March 31,
2008 and December 31, 2007, respectively)
    
    
    23,464
    
    
    
    29,162Prepaid expenses and other current assets
    
    
    5,942
    
    
    
    3,907Deferred tax assets, current
    
    
    1,482
    
    
    
    3,985Total current assets
    
    
    95,853
    
    
    
    95,003Property and equipment, net
    
    
    7,067
    
    
    
    7,214Other intangible assets, net
    
    
    16,070
    
    
    
    16,207Goodwill
    
    
    77,738
    
    
    
    74,584Deferred tax assets, long-term
    
    
    26,220
    
    
    
    21,110Security deposits and other long-term assets
    
    
    906
    
    
    
    847Total assets
    
    $
    223,854
    
    
    $
    214,965LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    5,936
    
    
    $
    5,011Accrued expenses and other current liabilities
    
    
    21,805
    
    
    
    18,817Income taxes payable
    
    
    3,291
    
    
    
    4,960Current portion of capital lease obligations
    
    
    14
    
    
    
    14Deferred tax liabilities, current
    
    
    1,364
    
    
    
    972Deferred revenue
    
    
    415
    
    
    
    604Total current liabilities
    
    
    32,825
    
    
    
    30,378Capital lease obligations, long-term
    
    
    4
    
    
    
    7Deferred tax liabilities, long-term
    
    
    6,769
    
    
    
    4,772Income taxes payable, long-term
    
    
    2,310
    
    
    
    2,939Other long-term liabilities
    
    
    271
    
    
    
    451Total liabilities
    
    
    42,179
    
    
    
    38,547Commitments and contingencies (Note 12)Stockholders equity:Common stock; par value $0.0001 per share;
100,000,000 shares authorized; 26,331,065 and
26,317,135 shares issued and 26,321,422 and
26,307,492 shares outstanding at March 31,
2008 and December 31, 2007, respectively
    
    
    3
    
    
    
    3Additional paid-in capital
    
    
    300,372
    
    
    
    299,334Accumulated deficit
    
    
    (123,578
    )
    
    
    (123,465
    )Accumulated other comprehensive income
    
    
    5,009
    
    
    
    677Treasury stock, at cost  9,643 shares
    
    
    (131
    )
    
    
    (131
    )Total stockholders equity
    
    
    181,675
    
    
    
    176,418Total liabilities and stockholders equity
    
    $
    223,854
    
    
    $
    214,965
  1




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##### Table of Contents



GREENFIELD ONLINE, INC.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (In thousands, except per share data)
  Three Months EndedMarch 31,2008
    
    
    2007Net revenues
    
    $
    30,934
    
    
    $
    27,469Cost of revenues
    
    
    6,805
    
    
    
    7,139Gross profit
    
    
    24,129
    
    
    
    20,330Operating expenses:Selling, general and administrative
    
    
    20,940
    
    
    
    12,980Panel expense
    
    
    812
    
    
    
    1,048Depreciation and amortization
    
    
    2,302
    
    
    
    2,153Research and development
    
    
    1,132
    
    
    
    1,132Total operating expenses
    
    
    25,186
    
    
    
    17,313Operating (loss) income
    
    
    (1,057
    )
    
    
    3,017Other income (expense):Interest income
    
    
    382
    
    
    
    145Interest expense
    
    
    (2
    )
    
    
    (2
    )Other expense, net
    
    
    (252
    )
    
    
    (23
    )Total other income, net
    
    
    128
    
    
    
    120(Loss) income before income taxes
    
    
    (929
    )
    
    
    3,137(Benefit) provision for income taxes
    
    
    (816
    )
    
    
    1,178Net (loss) income
    
    $
    (113
    )
    
    $
    1,959Net (loss) income per share available to common stockholders:Basic
    
    $
    (0.00
    )
    
    $
    0.08Diluted
    
    $
    (0.00
    )
    
    $
    0.07Weighted average shares outstanding:Basic
    
    
    26,316
    
    
    
    25,527Diluted
    
    
    26,316
    
    
    
    26,461
  2




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GREENFIELD ONLINE, INC.
 
 CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY
 (In thousands)
  AccumulatedAdditional
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    TotalCommon Stock
    
    
    Paid-In
    
    
    Treasury Stock
    
    
    Accumulated
    
    
    Comprehensive
    
    
    Stockholders
    
    
    ComprehensiveShares
    
    
    Amount
    
    
    Capital
    
    
    Shares
    
    
    Amount
    
    
    Deficit
    
    
    Income
    
    
    Equity
    
    
    IncomeBalance at December 31, 2007
    
    
    26,307
    
    
    $
    3
    
    
    $
    299,334
    
    
    
    9
    
    
    $
    (131
    )
    
    $
    (123,465
    )
    
    $
    677
    
    
    $
    176,418Three months ended March 31, 2008:Net loss for the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (113
    )
    
    
    
    
    
    
    (113
    )
    
    $
    (113
    )Issuance of shares related to the Employee Stock Purchase Plan
    
    
    6
    
    
    
    
    
    
    
    73
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    73
    
    
    
    Exercise of stock options
    
    
    8
    
    
    
    
    
    
    
    14
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14
    
    
    
    Unrealized loss on available-for-sale securities, net of related
income tax effects
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12
    )
    
    
    (12
    )
    
    
    (12
    )Translation adjustments, net of related income tax effects
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,344
    
    
    
    4,344
    
    
    
    4,344Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    4,219Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    951
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    951Balance at March 31, 2008
    
    
    26,321
    
    
    $
    3
    
    
    $
    300,372
    
    
    
    9
    
    
    $
    (131
    )
    
    $
    (123,578
    )
    
    $
    5,009
    
    
    $
    181,675
  3




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##### Table of Contents



GREENFIELD ONLINE, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands)
  Three Months EndedMarch 31,2008
    
    
    2007Cash flows from operating activities:Net (loss) income
    
    $
    (113
    )
    
    $
    1,959Adjustments
to reconcile net (loss) income to net cash provided by operating activities:Deferred income tax benefit
    
    
    (3,398
    )
    
    
    (132
    )Depreciation and amortization
    
    
    3,310
    
    
    
    2,941Litigation
settlement charge, net
    
    
    2,000
    
    
    
    Stock based compensation
    
    
    951
    
    
    
    901Loss on sales of marketable securities
    
    
    2
    
    
    
    Loss on disposal of property and equipment
    
    
    3
    
    
    
    Provision for doubtful accounts
    
    
    174
    
    
    
    65Changes in assets and liabilities, net:Accounts receivable
    
    
    6,156
    
    
    
    858Deferred project costs
    
    
    (89
    )
    
    
    (91
    )Other current assets
    
    
    (78
    )
    
    
    (21
    )Security deposits
    
    
    (51
    )
    
    
    26Other long-term assets
    
    
    8
    
    
    
    Accounts payable
    
    
    849
    
    
    
    (421
    )Accrued expenses
    
    
    (1,103
    )
    
    
    (1,021
    )Other current and long-term liabilities
    
    
    (317
    )
    
    
    402Payments of severance charges
    
    
    (376
    )
    
    
    (108
    )Income taxes payable
    
    
    (1,691
    )
    
    
    1,124Deferred project revenues
    
    
    (191
    )
    
    
    (108
    )Net cash provided by operating activities
    
    
    6,046
    
    
    
    6,374Cash flows from investing activities:Purchases of marketable securities
    
    
    (34,847
    )
    
    
    (5,223
    )Sales of marketable securities
    
    
    2,951
    
    
    
    Additions to property and equipment and intangibles
    
    
    (2,137
    )
    
    
    (1,709
    )Net cash used in investing activities
    
    
    (34,033
    )
    
    
    (6,932
    )Cash flows from financing activities:Proceeds of options exercised
    
    
    48
    
    
    
    625Proceeds of employee stock purchase plan
    
    
    40
    
    
    
    38Excess tax deduction on stock option exercises
    
    
    
    
    
    
    41Principal payments under capital lease obligations
    
    
    (3
    )
    
    
    (9
    )Other, net
    
    
    (23
    )
    
    
    (1
    )Net cash provided by financing activities
    
    
    62
    
    
    
    694Effect of exchange rate changes on cash and cash equivalents
    
    
    1,506
    
    
    
    62Net (decrease) increase in cash and cash equivalents
    
    
    (26,419
    )
    
    
    198Cash and cash equivalents at beginning of the period
    
    
    57,949
    
    
    
    20,873Cash and cash equivalents at end of the period
    
    $
    31,530
    
    
    $
    21,071Supplemental disclosures of cash flow information:Cash paid during the period for:Interest
    
    $
    2
    
    
    $
    2Income taxes
    
    
    4,273
    
    
    
    143
  4




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GREENFIELD ONLINE, INC.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 Note 1 Basis of Presentation:
  Basis of consolidation.
 Reclassifications.
 Note 2  Summary of Significant Accounting Policies:
  Concentration of Credit Risk.
 Investments in Marketable Securities.
  5




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##### Table of Contents



March 31,
    
    
    December 31,2008
    
    
    2007U. S. Treasury Securities
    
    $
    4,984
    
    
    $
    German Federal Government Debt Securities
    
    
    28,451
    
    
    
    Fair value
    
    $
    33,435
    
    
    $
    
 Panelist Incentives.
 Recently Issued Accounting Pronouncements
 Business Combinations.
 Noncontrolling Interests.
 Fair Value Measurements.
 6




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##### Table of Contents



Fair Value Option for Financial Assets and Financial Liabilities.
 Note 3  Earnings Per Share:
 Net
(Loss) Income per Share.
  Three MonthsEndedMarch 31,2008
    
    
    2007Weighted average number of common and potential
common shares outstanding:Basic number of common shares outstanding
    
    
    26,316
    
    
    
    25,527Dilutive effect of stock option grants and the
employee stock purchase plan
    
    
    
    
    
    
    934Diluted number of common and potential common shares
outstanding
    
    
    26,316
    
    
    
    26,461
 7




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##### Table of Contents



Note 4  Accumulated Other Comprehensive Income:
  March 31,
    
    
    December 31,2008
    
    
    2007Cumulative translation adjustment
    
    $
    5,021
    
    
    $
    677Unrealized loss on available-for-sale
securities, net of deferred taxes of $6 at
March 31, 2008
    
    
    (12
    )
    
    
    Total accumulated other comprehensive income
    
    $
    5,009
    
    
    $
    677
 Note 5  Prepaid Expenses and Other Current Assets:
  March 31,
    
    
    December 31,2008
    
    
    2007Prepaid maintenance and license contracts
    
    $
    524
    
    
    $
    414Prepaid expenses
    
    
    800
    
    
    
    685Prepaid insurance
    
    
    348
    
    
    
    497Deferred project costs
    
    
    157
    
    
    
    66Prepaid and refundable taxes
    
    
    967
    
    
    
    711Interest receivable
    
    
    914
    
    
    
    1,286Insurance reimbursement receivable
    
    
    2,000
    
    
    
    Other
    
    
    232
    
    
    
    248Total prepaid expenses and other current assets
    
    $
    5,942
    
    
    $
    3,907
 
 *
    
    Insurance reimbursement receivable represents the expected
reimbursement from our insurance carriers associated with the litigation
settlement. Note 6  Property and Equipment, net:
 
 EstimatedUseful
    
    March 31,
    
    
    December 31,Life-Years
    
    2008
    
    
    2007Computer and data processing equipment
    
    2  4
    
    $
    14,165
    
    
    $
    13,302Leasehold improvements
    
    2  5 *
    
    
    2,467
    
    
    
    2,445Furniture and fixtures
    
    7  8
    
    
    2,638
    
    
    
    2,597Telephone system
    
    4  5
    
    
    1,121
    
    
    
    1,123Automobile
    
    4
    
    
    14
    
    
    
    1420,405
    
    
    
    19,481Less: Accumulated depreciation
    
    
    
    
    (13,338
    )
    
    
    (12,267
    )Property and equipment, net
    
    
    
    $
    7,067
    
    
    $
    7,214
 
 *
    
    Lesser of the estimated life of the asset or the life of the underlying lease. 8




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##### Table of Contents



Note 7  Goodwill and Other Intangible Assets:
 Goodwill
   EuropeCiao Internet
    
    
    CiaoNorth
    
    
    Survey
    
    
    ComparisonGoodwill
    
    
    
    
    
    America
    
    
    Solutions
    
    
    Shopping
    
    
    TotalBalance as of December 31, 2007
    
    
    
    
    
    $
    31,153
    
    
    $
    10,475
    
    
    $
    32,956
    
    
    $
    74,584Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    758
    
    
    
    2,396
    
    
    
    3,154Balance as of March 31, 2008
    
    
    
    
    
    $
    31,153
    
    
    $
    11,233
    
    
    $
    35,352
    
    
    $
    77,738
 Other Intangible Assets
  As of March 31, 2008
    
    
    As of December 31, 2007Estimated
    
    
    Gross
    
    
    
    
    
    
    
    
    
    
    GrossUseful
    
    
    Carrying
    
    
    Accumulated
    
    
    Net
    
    
    Carrying
    
    
    Accumulated
    
    
    NetLife-Years
    
    
    Cost
    
    
    Amortization
    
    
    Amount
    
    
    Cost
    
    
    Amortization
    
    
    AmountInternal use software
    
    
    2-3
    
    
    $
    13,685
    
    
    $
    6,032
    
    
    $
    7,653
    
    
    $
    11,800
    
    
    $
    4,845
    
    
    $
    6,955Other software acquired
    
    
    0.42
    
    
    
    159
    
    
    
    159
    
    
    
    
    
    
    
    159
    
    
    
    159
    
    
    
    Panel members
    
    
    3-4
    
    
    
    7,104
    
    
    
    5,840
    
    
    
    1,264
    
    
    
    6,986
    
    
    
    5,295
    
    
    
    1,691Affiliate network
    
    
    3
    
    
    
    347
    
    
    
    347
    
    
    
    
    
    
    
    347
    
    
    
    333
    
    
    
    14Customer relationships
    
    
    5
    
    
    
    8,990
    
    
    
    5,450
    
    
    
    3,540
    
    
    
    8,455
    
    
    
    4,707
    
    
    
    3,748Non-competition agreements
    
    
    2.75-3
    
    
    
    610
    
    
    
    610
    
    
    
    
    
    
    
    2,806
    
    
    
    2,789
    
    
    
    17Domain names and service marks
    
    
    5-10
    
    
    
    8,574
    
    
    
    4,961
    
    
    
    3,613
    
    
    
    8,025
    
    
    
    4,243
    
    
    
    3,782Other intangible assets, net
    
    
    
    
    
    $
    39,469
    
    
    $
    23,399
    
    
    $
    16,070
    
    
    $
    38,578
    
    
    $
    22,371
    
    
    $
    16,207
    9




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##### Table of Contents



AmountFor the remaining nine months ended December 31, 2008
    
    $
    7,4892009
    
    $
    6,9712010
    
    $
    1,4072011
    
    $
    532012
    
    $
    532013
    
    $
    52
 Note 8  Accrued Expenses and Other Current Liabilities:
  March 31,
    
    
    December 31,2008
    
    
    2007Accrued payroll, bonus and commissions
    
    $
    4,730
    
    
    $
    6,573Panelist and respondent incentives
    
    
    5,479
    
    
    
    6,019Real-Time Sampling accruals
    
    
    231
    
    
    
    359Accrued panel costs
    
    
    127
    
    
    
    46Accrued management change and severance costs
    
    
    84
    
    
    
    460Non-income tax accruals
    
    
    1,537
    
    
    
    1,458Software license liability
    
    
    256
    
    
    
    349Accrued search engine marketing and advertising costs
    
    
    
    
    
    
    295Accrued audit and tax costs
    
    
    431
    
    
    
    665Outside sample accruals
    
    
    717
    
    
    
    951Accrued legal and investigation costs
    
    
    2,234
    
    
    
    130Accrued litigation settlement charge
    
    
    4,000
    
    
    
    Other
    
    
    1,979
    
    
    
    1,512Total accrued expenses and other current liabilities
    
    $
    21,805
    
    
    $
    18,817
 Note 9  Stock-Based Compensation:
   10




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##### Table of Contents



March 31,
    
    
    March 31,2008
    
    
    2007Cost of revenues
    
    $
    35
    
    
    $
    114Research and development expense
    
    
    88
    
    
    
    26Selling, general and administrative expense
    
    
    828
    
    
    
    761Pre-tax stock-based compensation expense
    
    $
    951
    
    
    $
    901
  Note 10  Segment Reporting:
   11




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##### Table of Contents



Three Months EndedMarch 31,2008
    
    
    2007Gross segment revenues:North American Internet survey solutionsThird-party segment net revenues
    
    $
    14,821
    
    
    $
    15,454Inter-segment revenues
    
    
    189
    
    
    
    133Gross segment revenues
    
    $
    15,010
    
    
    $
    15,587Ciao Internet survey solutionsThird-party segment net revenues
    
    $
    5,275
    
    
    $
    5,255Inter-segment revenues
    
    
    1,560
    
    
    
    1,486Gross segment revenues
    
    $
    6,835
    
    
    $
    6,741Ciao comparison shopping *Third-party segment net revenues
    
    $
    10,838
    
    
    $
    6,760Inter-segment revenues
    
    
    184
    
    
    
    Gross segment revenues
    
    $
    11,022
    
    
    $
    6,760Net revenues:North American Internet survey solutions
    
    $
    15,010
    
    
    $
    15,587Ciao Internet survey solutions
    
    
    6,835
    
    
    
    6,741Ciao comparison shopping
    
    
    11,022
    
    
    
    6,760Elimination of inter-segment revenues
    
    
    (1,933
    )
    
    
    (1,619
    )Total net revenues
    
    $
    30,934
    
    
    $
    27,469Segment operating income (as defined above):North American Internet survey solutions
    
    $
    2,650
    
    
    $
    2,839Ciao Internet survey solutions
    
    
    1,428
    
    
    
    1,863Combined Internet survey solutions
    
    
    4,078
    
    
    
    4,702Ciao comparison shopping
    
    
    5,911
    
    
    
    3,983Segment operating income
    
    
    9,989
    
    
    
    8,685Depreciation and amortization
    
    
    (3,310
    )
    
    
    (2,941
    )Stock-based compensation
    
    
    (951
    )
    
    
    (901
    )Corporate and other charges
    
    
    (6,785
    )
    
    
    (1,826
    )Total
operating (loss) income
    
    
    (1,057
    )
    
    
    3,017Other income, net
    
    
    128
    
    
    
    120(Loss) income before income taxes
    
    $
    (929
    )
    
    $
    3,137
 
 *
    
    Prior to the separation of the Ciao Internet survey solutions and the Ciao comparison shopping
businesses, the Ciao comparison shopping segment did not have any inter-segment revenues. The legal
separation was completed, and effective May 1, 2007, the Ciao comparison shopping segment began
recording inter-segment revenues from the sale of panelists to the Ciao Internet survey solutions
segment, which panelists are sourced from the Ciao comparison shopping portals. 12




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##### Table of Contents



Note 11  Income Taxes:
  For the Three MonthsEnded March 31,2008
    
    
    2007(Loss) income before income taxes:Domestic
    
    $
    (6,760
    )
    
    $
    (401
    )Foreign
    
    
    5,831
    
    
    
    3,538$
    (929
    )
    
    $
    3,137(Benefit) provision for income taxes:Currently payable:Federal
    
    $
    396
    
    
    $
    29State
    
    
    56
    
    
    
    52Foreign
    
    
    2,130
    
    
    
    1,229Total current income tax provision
    
    
    2,582
    
    
    
    1,310Deferred income tax (benefit) provision:Federal
    
    
    (2,785
    )
    
    
    (554
    )State
    
    
    (446
    )
    
    
    14Foreign
    
    
    (167
    )
    
    
    408Total deferred income tax (benefit)
    
    
    (3,398
    )
    
    
    (132
    )Total income tax (benefit) provision
    
    $
    (816
    )
    
    $
    1,178
  March 31,
    
    
    December 31,2008
    
    
    2007Deferred tax assets:Net operating loss carryforwards
    
    $
    18,357
    
    
    $
    15,926Stock-based compensation
    
    
    4,592
    
    
    
    4,279Capitalized panel costs
    
    
    739
    
    
    
    681Fixed assets
    
    
    1,320
    
    
    
    1,333Federal and state tax credits
    
    
    2,301
    
    
    
    2,309Other deferred tax assets
    
    
    2,055
    
    
    
    2,69529,364
    
    
    
    27,223Valuation allowance
    
    
    (147
    )
    
    
    (142
    )Total deferred tax assets
    
    $
    29,217
    
    
    $
    27,081Deferred tax liabilities:Intangible assets acquired
    
    $
    (3,034
    )
    
    $
    (3,351
    )Foreign exchange
    
    
    (6,591
    )
    
    
    (4,356
    )Other deferred tax liabilities
    
    
    (23
    )
    
    
    (23
    )Total deferred tax liabilities
    
    $
    (9,648
    )
    
    $
    (7,730
    )Total deferred tax assets, net
    
    $
    19,569
    
    
    $
    19,351
  13




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Note 12  Commitments and Contingencies:
 Legal Contingencies:
   14




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##### Table of Contents

s

Plumbers & Pipefitters Local Union No. 630
Pension Annuity Trust v. Greenfield Online, Inc., et al. Docket No. 07-cv-1118 (VLB)
  Note 13  Fair Value Measurement:
  15




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##### Table of Contents



Level 1   
    
    Inputs are quoted prices in active markets for identical assets or
liabilities.Level 2   
    
    Inputs are quoted prices for similar assets or liabilities in an active
market, quoted prices for identical or similar assets or liabilities that are not
active, inputs other than quoted prices that are observable and market-corroborated
inputs which are derived principally from or corroborated by observable market data.Level 3   
    
    Inputs are derived from valuation techniques in which one or more
significant inputs or value drivers are unobservable.
  Quoted Prices
    
    
    SignificantTotal
    
    
    Active in
    
    
    Other
    
    
    SignificantFair Value
    
    
    Markets for
    
    
    Observable
    
    
    UnobservableMeasurement
    
    
    Identical Asset
    
    
    Inputs
    
    
    InputsMarch 31, 2008
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Assets measured at fair value:Cash equivalents
    
    $
    16,256
    
    
    $
    16,256
    
    
    $
    
    
    
    $
    Investments in marketable securities
    
    
    33,435
    
    
    
    33,435
    
    
    
    
    
    
    
    Total assets measured at fair value
    
    $
    49,691
    
    
    $
    49,691
    
    
    $
    
    
    
    $
    
 Valuation
Techniques
 16




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##### Table of Contents



Item 2.
 MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 The following discussion and analysis of our financial condition and results of operations
should be read in conjunction with our Consolidated Financial Statements and related notes included
elsewhere in this Quarterly Report. This discussion contains forward-looking statements that
involve risks and uncertainties. Our actual results could differ materially from those anticipated
in these forward-looking statements as a result of various factors, including those discussed in
the section entitled Risk Factors in our Annual Report on Form 10-K for the fiscal year ended
December 31, 2007 and in this Quarterly Report on Form 10-Q . Also see the section entitled
Cautionary Note Regarding Forward-Looking Statements contained in this Quarterly Report on Form
10-Q.
 Segment Information
  Critical Accounting Policies and Estimates
   Recently Issued Accounting Pronouncements .
 17




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##### Table of Contents



Results of Operations
 Three Months Ended March 31, 2008 compared to Three Months Ended March 31, 2007
 Consolidated Results
  Three Months Ended March 31,2008
    
    
    %
    
    
    2007
    
    
    %($ in thousands)Net revenues
    
    $
    30,934
    
    
    
    100.0
    %
    
    $
    27,469
    
    
    
    100.0
    %Cost of revenues
    
    
    6,805
    
    
    
    22.0
    
    
    
    7,139
    
    
    
    26.0Gross profit
    
    
    24,129
    
    
    
    78.0
    
    
    
    20,330
    
    
    
    74.0Operating expenses:Selling, general and administrative
    
    
    20,940
    
    
    
    67.7
    
    
    
    12,980
    
    
    
    47.3Panel acquisition
    
    
    812
    
    
    
    2.6
    
    
    
    1,048
    
    
    
    3.8Depreciation and amortization
    
    
    2,302
    
    
    
    7.4
    
    
    
    2,153
    
    
    
    7.8Research and development
    
    
    1,132
    
    
    
    3.7
    
    
    
    1,132
    
    
    
    4.1Total operating expenses
    
    
    25,186
    
    
    
    81.4
    
    
    
    17,313
    
    
    
    63.0Operating (loss) income
    
    
    (1,057
    )
    
    
    (3.4
    )
    
    
    3,017
    
    
    
    11.0Other income, net
    
    
    128
    
    
    
    0.4
    
    
    
    120
    
    
    
    0.4(Loss) income before income taxes
    
    
    (929
    )
    
    
    (3.0
    )
    
    
    3,137
    
    
    
    11.4(Benefit) provision for income taxes
    
    
    (816
    )
    
    
    (2.6
    )
    
    
    1,178
    
    
    
    4.3Net (loss) income
    
    $
    (113
    )
    
    
    (0.4
    )%
    
    $
    1,959
    
    
    
    7.1
    %
 Net Revenues.
  Gross Profit.
  18




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##### Table of Contents



Selling, General and Administrative.
      Panel Expense.
  Depreciation and Amortization.
 19




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##### Table of Contents



i)
    
    the continuing development of our Unified Panel System, our Survey Management
System, and other Internet survey solutions operating systems in North America;ii)
    
    the expansion of our North American Internet survey solutions operating systems
to a worldwide enterprise system; and,iii)
    
    ongoing enhancements and software re-engineering in our comparison shopping
segments operating systems.
  Research and Development.
 Other Income, Net.
 (Benefit) Provision for Income Taxes.
 Net (Loss) Income.
 North American Segment Results
  Three Months Ended March 31,2008
    
    %
    
    2007
    
    %($ in thousands)Gross segment revenues
    
    $
    15,010
    
    
    
    100.0
    %
    
    $
    15,587
    
    
    
    100.0
    %Segment operating income
    
    
    2,650
    
    
    
    17.7
    
    
    
    2,839
    
    
    
    18.2
 20




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##### Table of Contents



Gross Segment Revenues.
 Segment Operating Income.
 Ciao Internet Survey Solutions Segment Results
  Three Months Ended March 31,2008
    
    %
    
    2007
    
    %($ in thousands)Gross segment revenues
    
    $
    6,835
    
    
    
    100.0
    %
    
    $
    6,741
    
    
    
    100.0
    %Segment operating income
    
    
    1,428
    
    
    
    20.9
    
    
    
    1,863
    
    
    
    27.6
 Gross Segment Revenues.
 Segment Operating Income.
 Ciao Comparison Shopping Segment Results
  Three Months Ended March 31,2008
    
    %
    
    2007
    
    %($ in thousands)Gross segment revenues
    
    $
    11,022
    
    
    
    100.0
    %
    
    $
    6,760
    
    
    
    100.0
    %Segment operating income
    
    
    5,911
    
    
    
    53.6
    
    
    
    3,983
    
    
    
    58.9
 Gross Segment Revenues.
 Segment Operating Income.
 21




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##### Table of Contents



Liquidity and Capital Resources
  Three Months Ended March 31,2008
    
    
    2007
    
    
    Change($ in thousands)Net cash provided by operating activities
    
    $
    6,046
    
    
    $
    6,374
    
    
    $
    (328
    )Net cash used in investing activities
    
    
    (34,033
    )
    
    
    (6,932
    )
    
    
    (27,101
    )Net cash provided by (used in) financing activities
    
    
    62
    
    
    
    694
    
    
    
    (632
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    1,506
    
    
    
    62
    
    
    
    1,444(Decrease) increase in cash and cash equivalents
    
    
    (26,419
    )
    
    
    198
    
    
    
    (26,617
    )Cash and cash equivalents at beginning of period
    
    
    57,949
    
    
    
    20,873
    
    
    
    37,076Cash and cash equivalents at end of period
    
    $
    31,530
    
    
    $
    21,071
    
    
    $
    10,459
  As of
    
    
    As ofMarch 31,
    
    
    December 31,2008
    
    
    2007($ in thousands)Cash and cash equivalents
    
    $
    31,530
    
    
    $
    57,949Investments in marketable securities
    
    
    33,435
    
    
    
    Total cash, cash equivalents and investments in marketable securities
    
    $
    64,965
    
    
    $
    57,949
      22




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##### Table of Contents



Contractual Cash Obligations and Other Commercial Commitments and Contingencies
  Total at
    
    
    Years Ended December 31,March 31,
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2013 and2008
    
    
    2008 (1)
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    2012
    
    
    ThereafterContractual obligations:Capital lease obligations
    
    $
    18
    
    
    $
    11
    
    
    $
    7
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Non-cancelable operating lease
obligations *
    
    
    12,865
    
    
    
    4,746
    
    
    
    4,122
    
    
    
    2,057
    
    
    
    1,117
    
    
    
    595
    
    
    
    228Severance commitments **
    
    
    84
    
    
    
    84
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Litigation settlement charge, net ***
    
    
    2,000
    
    
    
    2,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other long-term liabilities
    
    
    594
    
    
    
    72
    
    
    
    319
    
    
    
    104
    
    
    
    99
    
    
    
    
    
    
    
    Total contractual cash obligations
    
    $
    15,561
    
    
    $
    6,913
    
    
    $
    4,448
    
    
    $
    2,161
    
    
    $
    1,216
    
    
    $
    595
    
    
    $
    228
 
 (1)
    
    Includes only the remaining nine months of the year ending December 31, 2008.*
    
    Amounts for the remaining nine months ending December 31, 2008 and the year ending
December 31, 2009 have been reduced by approximately $249,000 and $250,000, respectively for
rental payments that we expect to receive under sub-lease agreements.**
    
    These severance commitments are associated with the departure of a senior management member
in the fourth quarter of 2007.***
    
    The litigation settlement charge, net reflects a $4.0 million commitment by the Company,
offset by an anticipated $2.0 million receivable from our insurance carriers. We expect to
pay the $4.0 million to the plaintiffs during the latter half of 2008, and expect to receive
the reimbursement from our insurance carriers by the end of 2008. See Costs Associated with
Pending Class Action Lawsuit below.   23




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##### Table of Contents



Costs Associated with Pending Class Action Lawsuit
   Plumbers & Pipefitters Local Union No. 630
Pension Annuity Trust v. Greenfield Online, Inc., et al. Docket No. 07-cv-1118 (VLB)
  24




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##### Table of Contents



Item 3: Quantitative and Qualitative Disclosures About Market Risk
  
 Item 4: Controls and Procedures
     25




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##### Table of Contents



PART II   OTHER INFORMATION
 
 Item 1. Legal Proceedings
     Plumbers & Pipefitters Local Union No. 630
Pension Annuity Trust v. Greenfield Online, Inc., et al. Docket No. 07-cv-1118 (VLB)
  26




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##### Table of Contents



Item 1A. Risk Factors
  Cautionary Note Regarding Forward-Looking Statements
  
    
    risks relating to securities class action lawsuits pending against us and some of our
current and former officers and our ability to complete the proposed settlement and recover
insurance proceeds related thereto;
    
    risks related to the success of new business initiatives, including the expansion of
our Ciao comparison shopping business to the United States;
    
    our ability in the United States to attract community members to our Ciao comparison
shopping portals and the resulting content they generate in the form of product and
merchant reviews, and our ability to attract merchants in the United States;
    
    risks related to the separation of our Ciao Internet survey solutions and comparison
shopping businesses;
    
    the growing competitiveness of our marketplace and our ability to compete therein;
    
    risks related to foreign currency rate fluctuations;
    
    our ability to develop and deploy new technologies;
    
    risks related to our reliance on search engine algorithm optimization to generate
internet traffic;
    
    our client satisfaction levels;
    
    our ability to build and maintain the size and demographic composition of the
Greenfield Online panel;
    
    our panelists responsiveness to our surveys;
 27




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##### Table of Contents




    
    issues related to the development, success and client acceptance of our Real-Time
Sampling® methodology for recruiting survey takers on the Internet;
    
    our ability to attract and maintain affiliates in our affiliate network supplying
Real-Time Sampling respondents;
    
    our ability to accurately predict future revenue levels and our ability to manage
expenses commensurate with such revenue levels;
    
    our ability to manage pricing pressure in North America and Europe;
    
    our reliance on our largest customers;
    
    our ability to manage or accelerate our growth and international expansion;
    
    our ability to restore and sustain sales growth in our European survey business;
    
    our ability to integrate successfully the businesses we may acquire in the future;
    
    the seasonality of demand for Internet survey solutions and comparison shopping
services; and
    
    the strength of our brands.
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other Information
  28




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##### Table of Contents



Item 6. Exhibits
  Exhibit No.
    
    Description of Exhibits31.1
    
    Certification of the Chief Executive Officer pursuant to Rule
13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as
amended, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 (Filed herewith).31.2
    
    Certification of the Chief Financial Officer pursuant to Rule
13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as
amended, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 (Filed herewith).32.1
    
    Certification of the Chief Executive Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C.
Section 1350 (Filed herewith).32.2
    
    Certifications of the Chief Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C.
Section 1350 (Filed herewith).
 29




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##### Table of Contents



SIGNATURE
  GREENFIELD ONLINE, INC.By:
    /s/ Robert E. BiesRobert E. BiesExecutive Vice President and
Chief Financial Officer  30




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##### Table of Contents



Exhibit No.
    
    Description of Exhibits31.1
    
    Certification of the Chief Executive Officer pursuant to Rule
13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as
amended, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 (Filed herewith).31.2
    
    Certification of the Chief Financial Officer pursuant to Rule
13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as
amended, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 (Filed herewith).32.1
    
    Certification of the Chief Executive Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C.
Section 1350 (Filed herewith).32.2
    
    Certifications of the Chief Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C.
Section 1350 (Filed herewith).
 31